Quicky #1 on Sino AG: It owns a sexy asset!

The German company Sino AG (XTP) offers high performance online brokerage services. What is interesting about the company is that a few years ago …

This is not investment advice. Please read the disclaimer.
I might currently or at a later point in time own shares (economic interest) in mentioned or related companies.

This is part #1 of the quicky series on new companies. You can read part #0 about my motivation here.

Ingo Hillen (Vorstand, ~CEO) invested 2017 into TradeRepublic via sino Beteiligungen GmbH, a 100% subsidiary of Sino AG. This investment already payed off handsomely for sino AG and its shareholder and could provide much higher upside in the future.

Operations

Sino AG’s business is quite assessable or small. It’s team consists of ~20 employees (yes, that is without a k for thousands) and serves 345 clients which hold investments of € 700k on average, as of July 2020. The high-performance trading software ‘MX-Pro’ is provided by tick Trading Software AG (tick TS, p. 16 Geschäftsbericht 2018/19).

Financial and operational key metrics for Sino AG are compiled below. Sino AG’s financial year is from Oct to Sept.

MetricFY 2017/18FY 2018/196m end. Mar ’20
Clients/Accounts404385 (incl. 23 new)364
Trades executed (m)0.640.590.45
Commission (€ k), net5,2534,6173,884
Commission (€ k), gross5,7585,0974,105
Admin. expenses5,3174,9693,125
compiled from company reports

The company hopes to strengthen its network of direct trading partners (i.e. Commerzbank). New clients can hopefully be won from TradeRepublic.

Two sexy assets

TradeRepublic could be described as the ‘German Robinhood’. It is a so called Neobroker, only assessible on a smartphone, primed for millennials (or is their even a younger generation yet again? I lose track). I use the app since January 2020, as you can read here. Functionality is very limited so far. I believe they mostly get customers who want to invest regularly (i.e. monthly) in ETFs. That was also the reason to get the app for me. Customer growth seems to be very healthy. I see 100k+ downloads for android. Additionally, google users seem to be quite happy (4.2/5). This coincides with my personal experience.

If you are interested in the TradeRepublic app and want to open an account please use my personal referral link to receive € 15 after your first trade. I will receive € 15 as well.

Sino’s stake in TradeRepublic is worth about € 22m based on latest reports (see here, here and here). This compares against a current market cap of € 32.5m, as of Sept 23.

Sino holds a stake in tick Trading Software AG, a company they founded in 2002 (company profile). Through its subsidiary sino Beteiligungen GmbH, sino AG owns 127,860 shares or a 12,7% stake in tick TS (see ad-hoc news, 13-Dec-2019: I assume this is up-to-date), worth about € 3.1m, based on a price per share (TBX) of € 24.6, as of Sept 23.

Both sexy assets account for 77% or € 25.1 m of Sino AG’s current market cap. That leaves € 7.4 m for the ‘residual operational business’. Using conservative assumptions (as a value investor) it is a stretch to assign any meaningful value to Sino AG’s operational business.

Conclusion

Sino AG owns two sexy and valuable assets. Besides that, the operational business’ value seems to be very dependent on higher trading activity and more clients in the near future.

An investment into Sino AG shares (XTP) resembles a bet (call) on TradeRepublic. I do believe that there is a good chance that TradeRepublic will be immensely profitable, but that is not enough for me to invest in Sino, currently.

In my second Quicky on new companies you can read why I liked Tick TS better: Quicky #2 on Tick Trading Software AG.

I hope you liked this short blog post on Sino AG. Follow my blog to not miss any new posts. I am happy to receive any feedback 🙂
Best, s4v

Update Sept 23, 2020: AD-hoc news from Sino, released on Sept 23, seem to indicate a further sale of Sino’s TradeRepublic stake. So further upside seems to be limited, unless the transaction, entered into earlier this year with several VC investors, is not executed within this calendar year. In this case, Sino could sell its stake to third party investors and likely realize a higher sales price. But, it is rather unlikely.
–> It seems I misread the ad-hoc news and that it was only about the execution of transactions, and Sino still holds a stake in TradeRepublic.

5 thoughts on “Quicky #1 on Sino AG: It owns a sexy asset!

  1. Hi, zu der letzten Meldung bezüglich des Verkaufs der Anteile an trade republic, ich glaube da geht es nur um den finalen Abschluss der bereits zuvor gemeldeten Transaktion zum Einstieg der Wagniskapitalgeber, oder?

    Liked by 1 person

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